The “docfix” is one of the least understood aspects of health reform. Fortunately, e21 has a primer on the subject.

“Docfix” is the euphemism attached to legislation to increase payments to physicians under Medicare. Under current law, those payments will be cut by 21% this year. Physicians understandably don’t want this to happen, nor do many legislators. The problem is that it costs money to restore those higher physician payments, and lots of it: hundreds of billions of dollars over the next decade alone.

The difficulty, of course, is that health reform is meant to be deficit-improving rather than deficit-worsening.

Proponents then tried what can only be described as a cynical gimmick: they simply split the bills into two parts: a “docfix” bill that would add to the deficit, and a separate health care bill that would be advertised as lowering the deficit. Taken together, it was always the case that the bills would worsen the fiscal outlook. But by pointing only to the “deficit-reducing” bill and ignoring the companion “docfix” bill moving through the Congress, disingenuous claims that health care reform would reduce the deficit continued to be made on both ends of Pennsylvania Avenue.
The House of Representatives played its dutiful role in this charade, separately passing both the health care legislation and the deficit-worsening docfix bill. The Senate, however, balked. When Senate Majority Leader Harry Reid attempted the same maneuver there, several Democrats as well as Republicans refused to play along with the game. Reid’s “docfix” bill – which would have added $247 billion to the debt over ten years – failed on a 47-53 cloture vote last October. No doubt the Senate was influenced by rising public concern about skyrocketing deficits and irresponsible budgeting. But the Senate vote didn’t end the “docfix” issue; it merely left it unresolved. Just how unresolved was revealed again this week with the release of the Administration’s budget.

The budget assumes away the “docfix” problem.

On Table S-2 in the Administration’s budget, the claim is made that health care reform will reduce the deficit by $150 billion over the next ten years. We’ll set aside the question of whether or not the health care bill will actually pass. More relevantly here, the claim that health care reform will reduce the deficit assumes that the 21% cut in physician payments will actually take place. CBO has already stated their skepticism about this: “The legislation would maintain and put into effect a number of procedures that might be difficult to sustain over a long period of time. Under current law and under the proposal, payment rates for physicians’ services in Medicare would be reduced by about 21 percent in 2010 and then decline further in subsequent years.” “Difficult to sustain” doesn’t tell the half of it. If one looks a mere 11 pages forward in the Administration budget, on Table S-7, one finds the higher physician payments magically restored – adding $371 billion to the deficit over ten years, or more than twice the advertised savings of health care reform. The Administration accepts no responsibility for this policy choice, describing it as an “adjustment to reflect current policies.” But of course “current policies” is not an accurate characterization. These higher physician payments are not current law. Nor are they the policy of the United States Senate, which refused to add these higher payments to the deficit just last October. This is instead an Administration maneuver to surreptitiously add $371 billion in further deficit-spending without shouldering the mantle of responsibility so lavishly extolled throughout the budget’s text.

The editorial goes on to suggest a possible bipartisan compromise.